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C H A P T E R 18Products Liability Law

CHAPTER PREVIEW

Products Liability Law: An OverviewProduct Liability: A Comprehensive DefinitionShift in the LawNegligenceWarranty Liability

Express WarrantiesImplied WarrantiesWarranty of TitleExclusion of WarrantiesBreach of WarrantyMagnuson-Moss Warranty Act

Strict LiabilityMisuse of Product by Injured Party or Subsequent

AlterationDamages Recoverable in a Strict Liability Case

CHAPTER HIGHLIGHTS

THIS chapter focuses on product liability:the liability that manufacturers and othersellers have to immediate purchasers,

users, and consumers of products, or to affectedbystanders, for physical injury and property dam-age caused by defective products they place onthe market. The chapter opens with some back-ground on the shift in law surrounding the pro-tection of the public from harmful productsplaced on the market. The remainder of thechapter is devoted to three well-recognized theories of liability—negligence, breach of war-ranty, and strict liability—that a buyer may useas the basis for recovery if he or she is injuredby a defective product. Similarities and differ-ences among these theories are noted. Somediscussion in the chapter revolves around theMagnuson-Moss Warranty Act, a federal law thatCongress passed to help prevent deceptivepractices in the field of warranties (guarantees)made by sellers of products.

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Products Liability Law: An Overview

The following summary is fictitious, but it is based on a real article that appearedin a regional newspaper. It is a typical products liability case.

Superman Coaster Suspended

Visitors won’t be waiting to board the Superman Ride of Steel roller coasterthis weekend. Operation of this ride has been suspended indefinitely after a 55-year-old man was thrown to his death on June 1 at Silver Lake in Morton,Florida. A report by the Florida Department of Public Safety, which investigatedthe June 1 accident, faulted a park attendant for not making sure the man was se-cured by a T-bar lap restraint. Park employees said the man was properly securedand the primary cause of the accident was the configuration of the restraint sys-tem. The June 1 accident was the fifth time since 2001 that a patron has fallenfrom a ride made by the Competon Co. In all five cases, the T-bar lap restraintwas called into question. Four of the accidents were fatal.

If any or all of the five people referred to in this newspaper article were to suefor injuries sustained, they most likely would bring their claim against the manu-facturer of the roller coaster for injuries due to a defect in the roller coaster. Thiscase would come under what the law terms product liability. Lawsuits involvingproducts liability have become very common because each year many Americansare injured and often left permanently disabled, while others die, in consumerproducts-related accidents. All states allow some form of recovery to persons in-jured by defective products. Many states have enacted comprehensive products li-ability statutes. Products liability cases run from the obvious (a car sold withoutbrakes that are operational) to the not so obvious (injury from exposure to to-bacco or the harmful side effects from an improperly tested drug). Products liabil-ity lawsuits have been filed for such items as computers,portable hair dryers, floorwax, sporting equipment, cars, sunglasses, eye drops, electric toothbrushes, barbe-cue grills, power lawn mowers, contraceptives, insulation materials, and prescrip-tion drugs and vaccines. These lawsuits have often resulted in big monetaryawards, often in the millions of dollars. Much of the law surrounding products lia-bility is found in common law, except where replaced by state statutes and theUniform Commercial Code.Because state statutory provisions can be very diverse,the U.S. Department of Commerce has issued the Model Uniform Products Liabil-ity Act (MUPLA) for voluntary use by the states.

Product Liability: A Comprehensive Definition

Picking up on the discussion in the opening paragraph, it is time to define productsliability so as to clear up any confusion as to what it encompasses.Product liabilityrefers to the liability that manufacturers or other sellers in the chain of sale (e.g.,wholesalers and retailers) have not only to immediate purchasers but also to the gen-eral public (e.g.,someone to whom the product was loaned,given,etc.;a consumer,abystander) for physical injury or property damage caused by defective products theyplace on the market or for the failure of these products to perform adequately oncethey are purchased.The cornerstone of a plaintiff’s case is the product’s defect.Thereare three types of defects that incur liability: design defects, manufacturing defects,and defects in marketing. Design defects exist before the product is manufactured(poor engineering and poor choice of materials).On the other hand,manufacturing

Products Liability: A Comprehensive Definition 283

product liability liabilityof manufacturers and sellers ofproducts to persons harmed bydefects in the products


284 CHAPTER 18 Products Liability Law

defects occur during the construction or production of the item. Marketing defectsdeal with poor or improper instructions as well as failures to warn consumers of hid-den dangers in the product.

Shift in the Law

There has been a significant shift in the law over the years. This shift has increasedprotection for the public by expanding the liability of manufacturers and sellers.Therule of caveat venditor, or “let the seller beware,”now prevails.This rule reflects theview that the seller should bear the burden of determining that goods conform tocertain standards. The rule of caveat emptor, or “let the buyer beware,”has practi-cally been abandoned by the courts.This strict rule had its heyday in the nineteenthand early twentieth century when buyers were expected to examine goods theywere buying and to rely on their own judgment about whether these goods were ofsuitable quality and free from defects. This rule assumed that both seller and buyerwere in an equal position to bargain. In today’s society,however, the seller has moreproduct knowledge, and the consumer possesses far less bargaining power than theseller.Besides,we live in an era of just prices and fair dealing in transactions. As notedin Chapter 15, the UCC insists upon these principles.

The trend in modern court cases is to allow anyone who is harmed by a prod-uct to sue whoever is in any way responsible. At one time, it was not possible foranyone except the ultimate consumer to sue.Even the ultimate consumer was lim-ited to suing the immediate seller, with whom the consumer had a contract. Thistype of suit was generally not successful because harm from the defective productwas seldom the fault of the retailer (the immediate seller), who had neither de-signed nor manufactured the product.

Today, product liability cases may be based on any one of three well-recognizedtheories of liability:negligence,breach of warranty,or strict liability. A buyer who isinjured and elects to sue may do so using one or all of these theories as the basisfor recovery in the same suit. (See also Table 18.1.)

In view of the seller’s increased liability, there has been a great proliferation ofproduct warnings.

Negligence

Negligence, a tort discussed in Chapter 4, is the failure of a person to act carefully(exercise reasonable care), thereby causing another person to suffer physical in-jury or property damage (e.g., a defective tire blows out and causes total loss ofthe car). As applied to product liability, the law of negligence imposes a duty onthe manufacturer or other seller in the chain of sale to exercise reasonable care toplace a safe product on the market. A safe product is one that is free from defects.Section 402A of the Restatement (Second) of Torts states that a defect is a condi-tion not anticipated by the user or consumer based on its intended use and that asa result, this defect makes the product unreasonably dangerous to use (i.e., it couldcause serious injury, death, or property damage). Defects can arise from the de-sign, manufacture, packaging, or labeling of a product. Negligent conduct very of-ten relates to other factors, such as a failure to properly test or inspect the finalproduct before it leaves the manufacturer or a failure to attach a label to a product

caveat venditor “let theseller beware”

caveat emptor “let thebuyer beware”


properly warning of a known danger related to the product. In one sense, thesefailures could be considered defects.

An ultimate consumer who purchases a defective product and is injured, dies,or suffers property damage most likely will initiate a lawsuit. (In case of death, theperson’s estate would bring the suit.)

The driver for a local soft drink company delivered several cases of its softdrink to a restaurant. When a waitress was placing glass bottles of the drink in alarge refrigerator in the restaurant’s kitchen, a bottle exploded in her hand. Thebottle broke into two jagged pieces and inflicted a deep cut, severing blood ves-sels, nerves, and muscles in the palm of her hand and thumb. The waitresscould sue the soft drink company for negligence.

Whom does the ultimate purchaser sue to recover damages? This question wasanswered by the court in the landmark case of MacPherson v.Buick Motor Co. (111N.E. 1050). This famous New York Court of Appeals case established beyond ques-tion that the manufacturer or any other seller in the chain of distribution (e.g., awholesaler or retailer) responsible for placing the defective product on the marketis liable. This case further established that others (e.g., innocent bystanders) whowere harmed by the defective product could also sue.Negligent conduct very oftenrelates to a manufacturer’s improper design of the product, a failure to inspect theproduct properly for defects after it leaves the assembly line, a failure to test theproduct adequately,or a failure to warn of a known danger related to the product.

Negligence 285

TABLE 18.1 Theories on Which Product Liability Cases Are Based

Theory of Basis for Degree ofLiability Legal Action Proof Required Who Can Sue Who Can Be Sued

Negligence

Warranty

Strict liability

Tort

Contract

Tort

Defective product.Negligent conduct (fault)must be established.Product defect causedbuyer’s injury.

Existence and breach of warranty.Breach caused buyer’sinjury.

Notice of breach givento seller.

Product was unreason-ably dangerous when itleft the manufacturer’s orother seller’s control, andthe buyer suffered an injury without referenceto negligence.

Anyone harmed.

Under the UCCin most states:the buyer, mem-bers of thebuyer’s family,householdguests. According tomodern caselaw, anyoneharmed.

Anyone harmed.

All parties in chain of distribution.

Immediate seller.





Suing under the negligence theory of product liability is often an unsatisfactoryremedy for the injured plaintiff to pursue because proving specific acts of negli-gence on the part of the defendant is difficult. For example, it may be hard to provethat the manufacturer was careless in designing the product or failed to test theproduct after it came off the assembly line.Determining negligence in this case mayinvolve a visit to the manufacturer’s plant to examine the facilities and processesused to produce and test a product. Acquiring information in this fashion could becostly and futile.

Warranty Liability

The story of warranty begins with a contract for the sale of goods. In that contract,as an inducement to buyers, sellers guarantee that the products they sell will con-form to certain qualities, characteristics, or conditions and that they are suitable forthe use for which they are intended.This guarantee by a seller is called a warranty.If a warranty is false, the seller has committed a breach. If the buyer suffers harm asa result of the breach,he or she may bring an action for damages.

Article 2 (on sales) and Article 2A (on leases) of the Uniform Commercial Code(UCC) designates several types of warranties that can arise in a sale or lease con-tract. There are two types of warranties made by sellers: express warranties andimplied warranties.

▼ Express Warranties

An express warranty is an oral or written guarantee given by manufacturers andsellers (e.g., retailers). Exactly what they promise in their express warranties is en-tirely up to them. A manufacturer’s express warranty is generally in writing, eitheron a separate card or as part of the instructions packed with the product. As indi-cated,express warranties may be oral or written. Accepting an oral warranty is nota good idea because the buyer may have a problem establishing its existence if theseller should deny having given such a warranty. Under the UCC, a seller’s expresswarranty may arise in several ways (UCC 2-313). The seller may make a factualstatement or a promise, orally or in writing, about the product. The seller may alsodescribe the goods to the buyer or show the buyer a sample of the item beingsold. To constitute an express warranty, the statement, description, or sample mustbe part of the basis of the sale; that is, it must be one of the reasons that the buyerpurchased the goods. Under the Code, the burden is on the seller to disprove theexistence of an express warranty.

Statement of Fact or Promise Any oral or written statement of fact or any promisemade to the buyer by the seller relating to the goods creates an express warranty.

You went to a used car dealer to purchase a used car with a V-8 engine andsaw a model you liked; because of your lack of knowledge about cars, however,you could not tell whether it had a V-8 or a V-6 engine. When you asked thesalesperson, she said: “This car absolutely has a V-8 engine.” Based on this re-sponse and your desire for the car, you made the purchase. A few days later, notsatisfied with the performance of the engine, you took the car to a garage foran evaluation, only to discover that the engine was a V-6.

In this example, the salesperson’s statement is an express warranty.You boughtthe car not only because you liked the color and that it was in excellent condition

warranty guarantee by sellerthat goods are not defectiveand that they are suitable forintended use

express warranty seller’sstatement of fact, promise, de-scription, or model that buyerrelies upon when purchasinggoods


but also because of the salesperson’s guarantee,“This car absolutely has a V-8 en-gine.” The salesperson did not actually use the word warranty or guarantee, butthat is not necessary. Under the UCC, her statement would be taken to mean,“I guarantee [promise] that this car has a V-8 engine.”The salesperson could arguein court that she did not intend to give a warranty,but a court of law would followthe UCC and would probably say she did. It is not necessary that a seller intend tomake a warranty. If what is said or done induces the person to buy the product,under the Code an express warranty is created.

A seller’s written statement or promise may be expressed in the written con-tract of sale or in a separate document. Manufacturers and sellers can even createwarranties through their advertisements in newspapers, brochures, and TV com-mercials. For example, because a TV commercial by the manufacturer said it wassafe to drive on mountainous terrain at high rates of speed, you purchased apickup truck with four-wheel drive.Courts have ruled that if you are injured whiletrying to do what the ad said the truck could do, a breach of an express warrantyhas occurred for which you may file an action for damages.

Sellers often make a variety of statements about their products. As a buyer inthe marketplace, the law holds you responsible for determining which of thesestatements are warranties and which are simply puffing. Puffing, or statementsby salespersons expressing their opinions about the goods they sell, does not forman express warranty (a statement of fact). The statement,“This car has the bestused-car value in town,” made to you by a salesperson as an inducement to pur-chase the car is not an express warranty. It is merely the salesperson’s opinion. Onthe other hand, a statement of opinion made to a layperson by a seller who worksas an expert is generally considered to be a warranty.

The Code does not distinguish between representations of fact and opinion.Courts, however, have held that the more specific the statement, the less likely itwill be treated as opinion or puffing as a matter of law.

Because an express warranty is considered part of the sales contract, part ofthe purchase price is consideration for the warranty. If there is a breach of war-ranty by the seller, the buyer may recover damages, but the sales contract re-mains in force.

Under the UCC, it is not essential that a warranty be given by the seller atthe time of the sale. A warranty, oral or written, given by the seller followingthe transaction becomes a part of the original sales contract without additionalconsideration (UCC 2-209). An oral warranty is enforceable even though theoriginal sales contract was in writing. As a practical matter, however, the buyermust be able to prove the existence of an oral warranty, or it will not be en-forced by the courts.

Harkness purchased a guitar from the House of Music without any war-ranty. About a week after Harkness made the purchase, she expressed someconcern about a guarantee and talked to the owner of House of Music about it.The owner said, “I guarantee all musical instruments I sell against all defectsfor one year.” This oral warranty, although made after the sale of the guitar,was binding.

Description of the Goods If the buyer purchases goods after they are describedby the seller, either orally or in writing (including drawings), there is an expresswarranty that the goods obtained by the buyer will conform to the description.

Warranty Liability 287

puffing salespersons’ state-ments expressing opinionsabout goods they sell; type of advertising that exaggeratesthe quality of merchandise



If you purchase goods after reading a description in a catalog or on the label of a can or box, an express warranty of description is also created.

You purchased a can of Quick-Sun at a drugstore because the words on thelabel stated that the contents, when applied, would give you a deep tan withinfifteen minutes. This description on the can is an express warranty.

Sample of the Goods Sometimes the buyer purchases goods after inspecting asample or model of these goods. In this case, there is an express warranty that thegoods delivered to the buyer will conform to the sample or model.

The local jeweler was taking orders for class rings. Before you ordered aring, the jeweler showed you a sample of the ring you intended to buy. The jew-eler, by showing you the sample, made an express warranty that the ring deliv-ered to you would be like the sample.

▼ Implied Warranties

An implied warranty is an obligation the law imposes on a seller. An impliedwarranty is not in writing and is not part of the sales contract. When a sale ofgoods is made, however, certain warranties become part of the sale even thoughthe seller may not have intended to create them. These implied warranties protectthe buyer when there is little or no opportunity to inspect the goods or the sellerdoes not expressly warrant the goods. Breach of the implied warranty is groundsfor a suit for money damages if injury or damage results from use of the product.In some cases, disaffirmance of the contract is also grounds for a lawsuit forbreach of warranty. The UCC has established two types of implied warranties: theimplied warranty of merchantability and the implied warranty of fitness for a par-ticular purpose (UCC 2-314; UCC 2-315). The question sometimes comes up abouthow long an implied warranty lasts. In most states, an implied warranty lasts for-ever. In a few states, however, the implied warranty lasts only as long as an expressed warranty that comes with the product. In these states, if there is no ex-press warranty, the implied warranty lasts forever.

Merchantability If a sale of new or used goods is made by the merchant who or-dinarily deals in these goods, there is always an implied warranty that the goodsare merchantable. Merchantable goods are goods that are fit for the ordinarypurposes for which they are manufactured and sold and also are of average qual-ity. Merchants have been held liable for breaching this warranty for many reasonsas for example because of a dead mouse found in a soft-drink container or a wormfound in a can of peas. Section 2-314 of the Code outlines the minimum require-ments of merchantability. In addition to what was stated, also included under theCode are the requirements that goods (1) be adequately contained, packaged, andlabeled and (2) pass without objection in the trade under the contract descrip-tion. If you purchase a pocket calculator, you have the right to expect that it willperform the functions (e.g., addition and subtraction) indicated on the calculatorand that you will not unexpectedly be harmed because of improper manufactur-ing or labeling.

You purchased an electric razor from Grigsby’s Department Store. The firsttime you used the razor, a defect caused the motor to burn out. Because the ra-zor was not merchantable, Grigsby’s Department Store was liable for breach ofthe implied warranty of merchantability.

implied warranty obliga-tion imposed upon seller by law

merchantable goodsgoods fit for the purposes forwhich they would ordinarily be used


The implied warranty of merchantability is a very broad warranty. It also appliesto the sale of food or drink that is consumed on the premises (as in a restaurant) orelsewhere (e.g., food purchased from a store and eaten at home) (UCC 2-314). Inthis case, merchantability means that the food is fit for human consumption.

The test of merchantability in the case of foods is generally based on what areasonable person can expect to find in the food. For example, a person eating adoughnut would not expect to find a human fingernail embedded in the dough-nut whereas a person can reasonably expect or anticipate finding a small fish bonein his or her fish chowder soup that he or she ordered in a restaurant. A classiccase on the reasonable expectation test is Webster v. Blue Ship Tea Room (347Mass. 421 N.E.2d 309). The case involved a Mrs. Webster who ordered fish chow-der soup in the Blue Ship Tea Room. After three or four spoonfuls of the chowdershe became aware that a fish bone had lodged in her throat. She was taken to thehospital where the bone was removed. She sued the Blue Ship Tea Room allegingbreach of the warranty of merchantability. The court denied her claim. In reachingits conclusion, the court said:“We should be prepared to cope with the hazards offish bones, the occasional presence of which . . . do not impair their fitness ormerchantability.” This opinion illustrates one approach a court might take. Conse-quently, each case brought to court involving a merchantability-of-food case willneed to be decided based on the facts of the case.

An implied warranty of merchantability exists whether a merchant is selling toanother merchant or to an ultimate consumer. No implied warranty of mer-chantability, however, exists in a sale of goods by a nonmerchant. For example,if you sell two snow tires at a garage sale, there is no implied warranty ofmerchantability.

Fitness for a Particular Purpose An implied warranty that goods will be fit for aparticular purpose arises if at the time the contract is made, the seller knows orhas reason to know the buyer’s purpose and the buyer relies on the seller’s skill orjudgment to select something suitable (UCC 2-315). (This warranty cannot be ap-plied when the buyer and seller have equal skill and knowledge.) This warrantyapplies to both merchants and nonmerchants.

Preston told Hunter, the owner of a retail paint store, that he wanted to paintthe exterior of his brick house. Hunter recommended Clean Gloss Shingle andShake paint and told Preston how to apply the paint. Preston followed the in-structions carefully and applied 6 gallons. Three months later, most of the painthad peeled, flaked, or blistered. Hunter is liable for breach of an implied war-ranty of fitness for a particular purpose.

Goods recommended by the seller under their trade name continue to give thebuyer protection under the implied warranty of fitness for a particular purpose aslong as there was actual reliance on the seller’s judgment.

Carp went to Auto Finishers and asked for a cleaner that would removespots from the cloth upholstery in her new car. The seller recommended EasyClean, the trade name of a new product on the market. When applied, however,the cleaner discolored Carp’s upholstery. When Carp discovered that severalother people had the same experience with Easy Clean, she had the cleaner pro-fessionally tested at a laboratory. The lab report indicated that the chemicals inthe cleaner were too strong. The store was liable for breach of the implied war-ranty of fitness.




If the buyer does not rely on the seller’s judgment but personally selects the goods, including brand-name items, or describes to the seller the type of goods he or she needs, the implied warranty of fitness for a particular purposedoes not apply.

▼ Warranty of Title

In every sale of goods under the UCC, there is an implied warranty of title by theseller, both merchant and nonmerchant (UCC 2-312). In other words, the seller au-tomatically guarantees that he or she owns the goods (has good title) free of anyencumbrances and liens and has the right to sell them.

Heinz sold a police scanner, which she had stolen, to Vance. Vance was un-aware that it had been stolen. McAllister, the true owner, identified the policescanner to the police by the serial number, and it was returned to him. Vancecan sue Heinz for breach of the implied warranty of title.

The warranty of title is an implied warranty. To distinguish it from those im-plied warranties that may be excluded from a sales contract, however, it is not des-ignated as such under the UCC.

▼ Exclusion of Warranties

Under the UCC, the seller may exclude certain express and implied warranties(UCC 2-316). A statement in a contract that excludes a warranty is called a disclaimer of warranty. If a disclaimer is used, the seller must use specific lan-guage set forth in the UCC to eliminate these warranties.

Express Warranties The seller may exclude an express warranty as part of a sales contract by being careful not to induce a person to buy the goods bymaking factual statements or promises, by describing the goods, or by produc-ing a sample or model of the goods. The seller may also exclude an expresswarranty by using clear, specific language. For instance, the following warrantyis legal and binding:“The goods sold under this agreement are warranted fromdefects in workmanship and materials for ninety days. No other express war-ranty is given and no affirmation by the seller, by words or actions, shall consti-tute a warranty.”

Sometimes a sales contract includes an express warranty by the seller andalso includes a statement that no express or implied warranties exist. In thiscase, the sentence eliminating the warranties is not binding. Take, for example,the following statements made by a seller in a sales contract: “Your SuperPermanex trash container is made of thick-wall, high-molecular-weight, high-density plastic. Its rugged handles can lift up to 250 pounds. The seller makesno express warranties of this product.” The sentence stating that there are noexpress warranties has no effect. The statements made about the trash con-tainer amount to an express warranty even though the word warranty or guar-antee was not used.

Any oral warranties made by the seller, before or at the time of the sale, thatare contrary to the terms of the written warranty given with the goods are notbinding. Where a written warranty exists, only the terms stated in that writtenwarranty are enforceable.

disclaimer of warrantystatement in a contract thatexcludes a warranty


Marcus purchased a refrigerator from a local appliance dealer and, at thetime of the sale, received a written manufacturer’s warranty stating in part that,“For 90 days from date of delivery, Roncone Refrigeration [manufacturer] willremedy any defect or replace any part or parts found to be defective.” Thesalesperson told Marcus that “Roncone will remedy any defects free of chargefor 120 days even though the written warranty says 90 days.” Because thesalesperson’s oral warranty is contrary to the written warranty, the oral war-ranty is not binding.

Implied Warranties If, before entering into the sales contract, the buyer hasexamined a sample or model of the goods or has refused to examine them afterbeing given the opportunity to do so by the seller, there is no implied warrantyas to defects that were or should have been obvious. This rule of caveat emp-tor, as noted on page 284, has practically been abandoned by the courts. It applies as long as there is no fraud on the part of the seller, such as concealingobvious defects.

You purchased a used car from the A-1 Car Company. At the time of pur-chase, you inspected the car but failed to notice that the two front tires werebald. Any attempt by you to cancel the contract with A-1 should fail. Bald tiresconstitute an obvious defect. You should have discovered this defect when youinspected the car.

The expressions “as is” and “with all faults” make it clear that no implied war-ranties exist and that the buyer takes the risk as to the quality of the goods.

Lloyd purchased a blender for cash from Cole’s Department Store, which wasrunning a special sale. A large sign at the counter next to the blenders read:“Prices as marked and all merchandise purchased ‘as is.’ ” Later, when Lloyd at-tempted to use the blender, she found that it did not work properly. The storewas not liable under an implied warranty of merchantability because the signidentified the sale of the blender as an “as is” sale.

The expressions “as is” and “with all faults,” or similar expressions, will not ex-clude an implied warranty of title. The warranty of title is excluded only if theseller specifically states that no warranty of title is given or when the circum-stances of the sale indicate that the seller does not have a clear title to the goodsbeing sold.

The student government of Geneva University took charge of lost andfound articles. To raise money for underprivileged children, the student gov-ernment officers had a Christmas sale of the lost and found articles in theirpossession. Given the circumstances of the sale, it should be clear to anybuyer that the student government does not have clear title to the goods be-ing sold.

The implied warranty of merchantability may be excluded either orally or inwriting, but the word merchantability must be used. If the exclusion is in writ-ing, the clause excluding merchantability must be conspicuous. According to theUCC, a term or clause is conspicuous when it is written so that a reasonable per-son would notice it. The following clause, written in large, bold print, excludes thewarranty of merchantability: SELLER MAKES NO WARRANTY OF MER-CHANTABILITY WITH RESPECT TO THE GOODS SOLD UNDER THE TERMSOF THIS AGREEMENT.




The implied warranty of fitness for a particular purpose can be excluded onlyin writing. Although the writing must be conspicuous, no specific language needbe used. The language used in the following example is sufficient: WE MAKE NOOTHER WARRANTIES, EXPRESS OR IMPLIED, BEYOND THE WARRANTYEXPRESSED IN THIS AGREEMENT.

▼ Breach of Warranty

Breach of a seller’s warranty ordinarily entitles a buyer to recover damages. It is asecond basis for suing under the theory of products liability. The right to damagesmay be lost, however, unless the plaintiff proves that (1) a warranty existed,(2) there has been a breach of the warranty, (3) the breach of warranty caused aloss or injury, and (4) notice of the breach was given to the seller. It is not neces-sary for the plaintiff to prove that the defendant was in any way negligent. Thebuyer must give notice of the breach within a reasonable time after he or she hasdiscovered or should have discovered that the goods were not as warranted. If thebuyer fails to notify the seller of any breach within a reasonable time after it wasdiscovered or should have been discovered, he or she is barred from any remedyagainst the seller (UCC 2-607).

Originally, because a warranty was part of a sales contract, a lawsuit for breachof an express or implied warranty was based on whether the buyer had enteredinto a contract of sale for a product with the seller. Parties who have contractedwith each other are said to be in privity of contract. When privity of contract isrequired, only the buyer can sue for breach of warranty and can sue only the im-mediate seller.

Atkinson purchased from the Ace Drugstore two bottles of Sun-Pro lotion,which was guaranteed by the manufacturer, the Altra Corporation, to protect aperson’s skin from sunburn. Atkinson gave a bottle to his sister to use. Afterthey applied some of this lotion, their skin was severely sunburned.

Under the privity of contract rule, only Atkinson could sue, and he could sue onlythe Ace Drugstore,with whom the contract for the purchase of Sun-Pro was made.To recover for any damages, the sister would have to sue Atkinson, her brother.

The privity requirement as to who can sue for breach of warranty has beeneliminated under the UCC and in the courts (the decision in the MacPhersoncase cited on page 285 was a landmark decision in the abolition of the privityrequirement), thus allowing people other than the buyer to sue. Three alterna-tives (A, B, and C) are allowed under the Code (UCC 2-318). All three alternativeshave eliminated the privity requirement. States may, if they wish, select fromamong these three. Most states have eliminated the privity concept and adoptedone of the alternatives. Alternative A, which has been most widely adopted, ex-tends the seller’s warranty to any member of the buyer’s family or household ora guest in the buyer’s home who suffers personal injury while using or consum-ing the product. Alternative B has been adopted in some states. It extends theseller’s warranty to anyone who suffers personal injury while using or consum-ing the product, (even a passing stranger would be covered under this alterna-tive). Alternative C not only extends coverage to anyone while using or consum-ing the product, but it covers any injury, not simply personal injury. Applyingalternative A, the most popular alternative to the previous example, Atkinson’ssister may also sue the immediate seller.

privity of contractcontractual relationship


The UCC is neutral on relaxing the privity requirement that deals with theissue of who can be sued for breach of warranty. Under the UCC, the immedi-ate seller remains as the person against whom a lawsuit may be directed. It isleft to the courts to decide on a case-by-case basis if anyone beyond the imme-diate seller can be sued. Consequently, modern courts, with the impetus of thelandmark case Henningsen v. Bloomfield Motors, Inc. (32 N.J. 358), have alsodropped the privity requirement and now permit all individuals harmed by aproduct to sue not only the immediate seller but also all parties in the chain ofdistribution. This chain may include not only the retailer but also the manufac-turer and the wholesaler. Again referring to the example given earlier, bothAtkinson and his sister could, under case law, sue the manufacturer for their injuries.

There are some disadvantages to suing for breach of warranty. Failure to prop-erly notify the seller of the breach within a reasonable time after he or she discov-ers or should have discovered the breach will bar the buyer from suing for thebreach (UCC 2-607). As the injured party, the buyer would then have to seek an-other remedy. Recall also that sellers, as they are entitled to do under UCC 2-316,may and often do disclaim express and implied warranties. If a seller does give anexpress warranty, it often contains restrictions and limitations. Another drawbackrelates to an inspection of the goods. If the buyer inspects the goods but fails todiscover “noticeable” defects or for some reason refuses to inspect the goods, heor she waives any benefits from implied warranties against defects that an inspec-tion reasonably should have detected.

▼ Magnuson-Moss Warranty Act

The federal Magnuson-Moss Warranty Act of 1975 was passed by Congress toprotect purchasers of consumer goods (those goods used for personal, family, orhousehold purposes). The act applies only to written warranties. The purpose ofthe act is to make available to consumer purchasers adequate and understand-able information about written warranties. Up to 1975, most warranties werenot understandable and were unfair; furthermore, those giving the warrantiesdid not live up to the promises made in the warranties. This act has not re-placed UCC warranty law, but in certain cases, it imposes additional standardsand remedies.

Under this act, the terms of any warranty must be disclosed in simple and read-ily understood language and must be accessible to the consumer, as by attachingthe warranty to the package or placing it in a binder with signs posted informingconsumers of its availability. The law does not require manufacturers and sellersto give written warranties. If they choose to give a warranty and that warranty iswritten, and if the warranted goods cost more than $10, however, the warrantymust be prominently labeled as either a “full” warranty or a “limited” warranty. Inaddition, if the cost of the goods is more than $15, the Federal Trade Commissionrequires that certain additional information in the nature of disclosures be madefully and conspicuously in “readily understood language.”Such disclosures include,but are not limited to, the parts that are covered by the warranty, the length of thewarranty period (e.g.,“full ten-year warranty”), a step-by-step explanation of theprocedure the consumer should follow to obtain performance of any warrantyobligation, and whether the enforceability of the written warranty is limited to the


Magnuson-Moss Warranty Act law prevent-ing deceptive warranties andrequiring terms and conditionsto be clear and understandable



original buyer or is extended to every buyer who has owned the goods during theterm of the warranty period. Furthermore, if a written warranty is given, the im-plied warranties of merchantability and fitness for a particular purpose cannot beeliminated by the manufacturer or seller.

A full warranty gives the buyer much more protection than a limited warranty.For example, a full warranty many times does not have a time limit. Further, it re-quires a defective product to be repaired within a reasonable time at no cost to theowner. If it cannot be repaired, the“lemon clause”of the act requires the manufac-turer or seller to refund the buyer’s money or to replace the product.Limited war-ranties have more restrictions than full warranties. Limited means be cautious,something is missing. For example, a limited warranty may cover only parts, not la-bor; allow only a prorated refund or credit (smaller refunds or credit dependingon how long you’ve had the product); require you to return a heavy product to thestore for service; cover only the first purchaser; charges for handling. A productcan carry more than one written warranty. For example, it can have a full warrantyon part of the product and a limited warranty on the rest. Very importantly, theseller can limit the time the goods are covered by any implied warranties, but ithas to respond to the duration of the express warranty. Also, with a limited war-ranty, the buyer is not guaranteed a refund or a replacement if the product cannotbe fixed. Most limited warranties cover parts but not labor. When only a limitedwarranty is given, this fact must be conspicuously designated. An example of a lim-ited warranty is shown in Figure 18.1. It deals with a paper shredder.

To help consumers make better informed decisions, warranty informationabout a product must be readily available in the store for customer inspection.Pro-visions in the act provide formal and informal procedures for settling claims forbreach of warranty.One significant feature allows consumers to recover attorney’sfees if a lawyer is needed to enforce a warranty.

Strict Liability

Along with negligence and breach of warranty, the third major area of productsliability that a buyer may choose as the basis for recovery if he or she is injured bya defective product is strict liability.This theory,based on tort law, is now the dom-inant product liability theory used as a basis for lawsuits in nearly every state.Section 402a of the Restatement, Second of Torts, imposes strict liability in tort onmerchant sellers for both personal injuries and property damage caused from sell-ing a product in a defective condition that causes the product to be unreasonablydangerous. The rapid growth of this theory of liability is because the injured partydoes not have to prove that the defect causing the injury resulted from negligence(fault), nor does the injured party need to depend on the existence of a warranty.Strict liability (also referred to a strict product liability) focuses on the product it-self and not on the conduct of the manufacturer or others in the chain of sale.Courts in strict liability cases are interested that a product defect arose but nothow it arose. The injured party, suing as the plaintiff, simply needs to show that aproduct was unreasonably dangerous at the time it left the manufacturer’s or otherseller’s control and that she or he suffered an injury, without reference to negli-gence. Unreasonably dangerous means the plaintiff must present evidence that theproduct posed a substantial likelihood of harm because (1) it contained a design


defect, (2) a flaw occurred in the manufacturing process, or (3) the product wasnot accompanied by appropriate warnings of a risk or hazard (failure to warn).Theinjured party does not have to show how or why the product became defective.Consequently, even an innocent manufacturer—one that has not even been negli-gent—may be liable if the injured party can show a link between the unreasonablydangerous product and the injury. Without proving to the court that this link ex-ists, the injured party may not prevail in a lawsuit under the strict liability theory.

Viscount underwent LASIK surgery at Dell Eye Associates. The blade used forthe surgery broke in her eye during the surgical procedure and cut her cornea.Viscount now has hazed vision and, according to her doctor, she will need acorneal transplant. Since the failed eye procedure, Viscount has suffered severeand painful injury. Roberts and Thiel Inc., the company that manufactured theblade, admitted the blade was defective. Viscount sued Roberts and Thiel forstrict liability and most likely will be successful.

Product liability cases often hinge on testimony by expert witnesses establish-ing or denying a link between an alleged defect and an injury. If you are injured bya product, you should consult an experienced attorney who can advise you aboutthe potential success of your case and how the manufacturer and other defendants

Strict Liability 295

FIGURE 18.1

Limited Express Warranty

LIMITED WARRANTYGeneral Binding Corporation (“GBC”) warrants to the original purchaser thecutting blades on this product to be free from defects in workmanship andmaterial under normal use and service for a period of five (5) years afterpurchase. GBC warrants to the original purchaser that all other parts of thisproduct to be free from defects in workmanship and material under normaluse and service for a period of one (1) year after purchase. GBC’s obligationunder this warranty is limited to replacement or repair at GBC’s option com-pletely without charge for material or labor of any warranted part founddefective by GBC.

THIS WARRANTY IS IN LIEU OF ALL OTHER EXPRESSED WARRANTIES.REPRESENTATIONS OR PROMISES INCONSISTENT WITH, OR IN ADDITIONTO, THIS WARRANTY ARE UNAUTHORIZED AND SHALL NOT BE BINDINGUPON GBC. IN NO EVENT SHALL GBC BE LIABLE FOR ANY SPECIAL, INCI-DENTAL OR CONSEQUENTIAL DAMAGES, WHETHER OR NOT FORESEE-ABLE. SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OFSPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES, SO THE ABOVEEXCLUSION OR LIMITATION MAY NOT APPLY TO YOU.

ANY IMPLIED WARRANTIES ARE LIMITED IN DURATION TO THE DURA-TION OF THIS WARRANTY. SOME STATES DO NOT ALLOW LIMITATIONSON HOW LONG AN IMPLIED WARRANTY LASTS, SO THE ABOVE LIMITA-TION MAY NOT APPLY TO YOU.

This warranty shall be void if the product has been subjected to misuse ordamaged by negligence or accident, or altered by anyone other than author-ized agents of GBC.

This limited warranty gives you specific legal rights, and you may also haveother rights which vary from state to state.



are likely to try to avoid liability.You should keep adequate records surroundingyour case, including photographs of the site where the injury occurred and of theproduct that caused the injury.

The average consumer can presume that the product is not unreasonably danger-ous and harmful if, for example, there are no warnings in the instructions that comewith the product and if there are no other references to danger on the product label.The manufacturer or other sellers cannot claim as a defense that reasonable care wasused to discover defects in the manufacture of the product, that reasonable care wasused to prepare and sell the product,or that there was no privity of contract.

The effect of the strict liability theory in most states is therefore to make themanufacturer, seller, or whoever is in any way responsible for the harm (e.g., thedesigner of the product) liable without question for the safety of the product. It al-lows not only the buyer to sue but also other persons who used the goods and suf-fered injury or damage because of the defect.

While driving his new car within the speed limit down the main street of hishometown, Arnet struck a parked car and was seriously injured. The accidentresulted because the newly designed steering column on this model of carbroke, causing Arnet to lose control of the car. Arnet successfully sued the carmanufacturer and recovered damages under the doctrine of strict liability.

In this case, although the car manufacturer proved that it was not negligent be-cause it had used all possible care in manufacturing the car, the court neverthelessconcluded that the design of this new model met the criteria for being unreason-ably dangerous because the defective steering column was not a danger that a rea-sonably prudent person would be subjected to in a new car.

Misuse of Product by Injured Party or Subsequent Alteration

In many product liability lawsuits, manufacturers and sellers raise the improperconduct of the buyer as a defense to lawsuits by injured buyers. They claim thatthe buyer used their product either knowing that it was defective or in a mannernot contemplated by the seller, such as in the case of a teenager who mounts themotor from a lawn mower onto a bicycle and is then thrown from the bike whileriding because the motor stalls and “dies out.” Although manufacturers and sellersmay generally have good cases, courts still offer some protection to the buyer byapplying the comparative negligence doctrine (see page 82) or limiting a seller’sdefense by requiring that the buyer’s misuse of a product not be foreseeable bythe seller. Subsequent alteration of the product by the user or consumer wouldalso be an obstacle to recovery. Section 402A of the Restatement, Second, of Tortsindicates that liability exists (on the part of manufacturers) only if the productreaches the user or consumer without substantial change in the condition inwhich it was sold.

Damages Recoverable in a Strict Liability Case

If you are the plaintiff in a lawsuit (person bringing the action) for a defective prod-uct and you have a successful case, you are entitled to damages resulting from thisproduct.Chapter 4 relating to torts and Chapter 5 pertaining to lawsuits should havegiven you a good idea of the type of damages to expect in a civil lawsuit. However,


Summary 297

we will briefly review the types of damages to which you may be entitled. First,there are compensatory damages that include medical bills such as payments toyour doctor and to the hospital, lost earnings from being out of work, and ex-penses connected to any property damaged as a result of the defective product.A major component of compensatory damages is “pain and suffering,” which referboth to physical pain and mental anguish that result from your injury. If you aremarried and the injury has affected the relationship with your spouse, you may be entitled to loss of consortium damages. (Your wife may also be entitled to thesedamages.) Finally, you may under very strict circumstances be entitled to punitivedamages if the court feels that the conduct of the defendant (the manufacturer orother seller) was so awful that he or she should be punished and deterred fromdoing anything like this again.

It is important in a strict product liability case that, if you have been injured bya product, this product be kept and not altered in any way.Keep your proof of pur-chase and the warranty information (including the instruction booklet) that camewith the product. Also obtain and write down the name of the person who soldyou the product and the name or names of any witnesses to the event causingyour injury. Consult your attorney as soon as possible to first determine that youhave a case and second, if you do have a case, that under her or his guidance, yougather the evidence for future hearings or a trial.

A buyer injured by a defective product may sue (as the plaintiff ) a manufacturer and other sellersin the chain of distribution (as defendant or defen-dants) under the umbrella of products liabilitybased on one of three well-recognized theories ofliability: negligence, breach of warranty, or strict liability. (A summary of theories on which prod-uct liability cases are based and the implication ofeach appears in Table 18.1.) The trend in moderncourt cases is to allow not only the buyer of the de-fective product but also anyone who is harmed bythis defective product to sue, and to sue whoeveris in any way responsible.

The buyer who sues for negligence must provethat the defendant’s negligence caused a defectiveproduct to be placed on the market and that thisdefective product caused the buyer to suffer per-sonal injury or property damage. Negligence, how-ever, is often an unsatisfactory remedy because itis hard to prove. If the buyer instead chooses tosue for breach of warranty, he or she must estab-lish the existence and the breach of a warranty, aninjury resulting from the breach, and that notice ofthe breach was given to the seller. It is not neces-sary to prove that the defendant was negligent.

There are disadvantages to suing for breach ofwarranty, most notably that the buyer will have nobasis for a lawsuit if the seller exercised his or herright under the Code to disclaim express and cer-tain implied warranties. The most popular theoryof liability under which to sue is strict liability.This theory, like negligence, is based on tort law.Unlike negligence, however, the buyer does nothave to prove that anyone was negligent. In otherwords, it is a no-fault approach. The buyer mustonly show that at the time it left the manufactureror another seller in the chain of the sale, the prod-uct was unreasonably dangerous due to a defect indesign manufacturing, or marketing, and causedinjury or damage as a result. Nearly every state hasnow accepted the concept of strict liability, whichis outlined in Section 402A of the Restatement,Second, of Torts.

If you are the plaintiff in a lawsuit for a defec-tive product and you win your case, you are enti-tled to damages resulting from this product.

Congress passed the federal Magnuson-MossWarranty Act to help prevent deceptive warrantypractices.This act has not replaced warranty law butrather imposes additional standards and remedies.

Summary



In many product liability lawsuits, manufactur-ers and sellers offer as a defense to lawsuits by in-jured buyers the improper conduct of the buyer(e.g., using the product in an unauthorized way).

Article 2 of the UCC provides for two types ofwarranties made by sellers: express warranties andimplied warranties. Express warranties arise in sev-eral ways. The seller may make a factual statementor a promise about the product, may describe thegoods to the buyer, or may show the buyer a sam-ple of the item being sold. To constitute an expresswarranty, the statement, description, or samplemust be part of the basis of the sale. Implied war-ranties are imposed on a seller by law. The twotypes of implied warranties are the implied war-ranty of merchantability and the implied warrantyof fitness for a particular purpose. Another type of

implied warranty exists under the Code but is notdesignated as such: the implied warranty of title.Express warranties can be excluded from salescontracts by using clear, specific language thatmeets the requirements of the UCC or simply byrefraining from using language, descriptions, orsamples that induce people to purchase the goods.The expressions “as is” and “with all faults” excludeall implied warranties except the implied warrantyof title. The implied warranty of title is excludedonly if the seller specifically states that no warrantyof title is given or if the buyer realizes or should re-alize that the seller does not own the goods. If thebuyer examines the goods, sample, or model or hasrefused to do so after a demand by the seller, thereis no implied warranty as to the defects that wereor should have been obvious.

IMPORTANT LEGAL TERMS

QUESTIONS AND PROBLEMS FOR DISCUSSION

caveat emptor

caveat venditor

disclaimer of warranty

express warranty

1. Under the UCC, goods sold by merchants aregenerally covered by a warranty both expressand implied. An example of an express warrantywould be a warranty ofa. fitness for a particular purposeb. merchantabilityc. conformity of goods to sample or descriptiond. strict liability

2. Under the UCC, when there has been a sale ofgoods, which of the following statements is cor-rect regarding the warranty of merchantability?a. The warranty cannot be disclaimed.b. The warranty arises as a matter of law.c. The warranty arises when the buyer relies on

the seller’s skill and judgment in selecting thegoods purchased.

d. The warranty must be in writing.

3. To establish the basis of a lawsuit for strict lia-bility for personal injuries that result from theuse of a defective product, the injured party(the consumer) must prove that

a. the product sold was unreasonably dangerousdue to a defect

b. the seller was negligentc. the seller breached the contract with the

consumerd. there was privity of contract

4. Thompson purchased a used car from Van Bortal Sales for $450. A clause in the writtencontract in boldface type provided that the carwas being sold “as is.” Another clause providedthat the contract was intended as the final ex-pression of the parties’ agreement. After driv-ing the car for one week, Thompson realizedthat the engine was burning oil. Thompsontelephoned Van Bortal and requested a refund.Van Bortal refused based on the original agree-ment but orally gave Thompson a warranty on the engine for six months. The engine ex-ploded three weeks later. Can Thompson col-lect based on the oral warranty given to him by Van Bortal?

implied warranty

Magnuson-Moss WarrantyAct

merchantable goods

privity of contract

product liability

puffing

warranty


Cases for Review 299

5. Fisk bought a used boat from the Newport Marina that disclaimed “any and all warranties” inconnection with the sale. Newport was unawarethe boat had been stolen from James. Fisk surren-dered it to James when confronted with proof ofthe theft. Fisk then sued Newport. Should Fisk besuccessful?

6. The B&L Food Company prepared,packed,andsold quality food products to wholesalers and re-tailers.Marvin,while grocery shopping at Gregg’sRed & White retail store,purchased several cans of“Ma’s Fancy Baked Beans.” At dinner one evening,Eva,Marvin’s sister,bit into a spoonful of the beansand cut her mouth on small pieces of glass thatwere embedded in the serving of beans on herplate.Can Eva,a third party,bring an action againsteither Gregg’s Red & White or the B&L FoodCompany?

7. The county of Ontario, New York, orderedtwenty-three cell doors for the new wing of theOntario County Jail. The vice president of thecompany that was to manufacture the doors toldthe jail superintendent that he knew exactlyhow the cells should be constructed; the jail su-perintendent relied on the vice president’s state-ment. When the cell doors were delivered, thebars were so far apart that prisoners could wrig-gle through them. Instead of the standard 5 inches, the bars were 53⁄4 inches apart. What

warranty has been breached? What is the basisfor this breach of warranty?

8. Bertram purchased a reconditioned paper shred-der from Alliance Paper Co. for use in her busi-ness. Before putting the shredder into use, shemade some modifications that she felt would im-prove the efficiency of the shredder. The manu-facturer of the paper shredder originally was Cohen Office Furniture and Office EquipmentCo. While shredding some important office doc-uments, an employee of Bertram was injured be-cause the shaft holding the shredder blade cameloose and severed his finger. Based on a claim ofstrict liability, the employee sued Cohen OfficeFurniture for his injuries. Legally, does the em-ployee have a claim?

9. Dayton purchased a rug from Max Floor Cover-ing because the owner stated that the rug was “a genuine Oriental rug.”Could this statement be considered an express warranty?

10. Jason and several members of her college soccerteam purchased team jackets after seeing a sam-ple shown to them by a salesperson from theChampion Sportswear Company. When the jack-ets arrived and Jason found that hers was quitedifferent from the sample, she returned the jacketto the company. The company refused to take itback.Did Jason have the right to return the jacket?(Assume that Jason is an adult.)

CASES FOR REVIEW

1. Walker owned several pizza parlors that operatedunder the name of El Fredo Pizza, Inc. He plannedto open a new parlor and to purchase a new oven.When a friend suggested that Walker purchase anoven from the Roto-Flex Oven Co., Walker con-tacted an agent from that company and negotiatedthe purchase of a new oven.Walker made clear theparticular purpose for which he was buying theoven—to cook pizza—and that he was relying onthe agent’s skill and judgment in selecting a suit-able oven. Based on the agent’s suggestion, Walkercontracted to purchase a custom-built, Roto-Flex“Pizza Oven Special.” Once the oven was installed,Walker had nothing but trouble—uneven heat-ing—which caused the pizza to be improperlycooked when it came out of the oven.Roto-Flex at-tempted to fix the oven but could not. El Fredo

brought action against Roto-Flex for breach of theimplied warranty of fitness for a particular pur-pose. Should El Fredo be successful? (El FredoPizza, Inc.v. Roto-Flex Oven Co., 291 N.W.2d 358)

2. The Stones entered into a contract to purchase amobile home from Mobile Housing, Inc. Mobiletook the Stones through the model on display onone of its lots and informed them afterward thatthe one they purchased would be like the model.The one delivered, however, was very differentfrom the model. Mobile refused to do anythingabout it, and the Stones sued to rescind the con-tract and recover the payments they had alreadymade. Did the Stones have a legal claim? (MobileHousing, Inc. v. Stone, 490 S.W.2d 611)

3. Balch purchased a dog for $800 from Newberry,who operated a kennel. Before the sale, Balch



informed Newberry that he wanted a male dog forbreeding purposes. Newberry stated that the doghad the ability to produce pups of pedigree qual-ity. Balch relied on this fact when he purchasedthe dog. After the purchase, Balch discovered thatthe dog was sterile and therefore of no value toBalch for breeding pups. Could Balch demand thereturn of his $800 after returning the dog? (Balch v.Newberry, Okla. 253 P.2d 153)

4. Hook sold two milk trucks, together with twomilk routes, to Janssen. At the time of the sale,Hook told Janssen that the trucks were in goodcondition. Janssen, however, had inspected thetrucks before purchasing them. He was aware thatthe trucks needed repairs and were in generallypoor condition. After purchasing the trucks,Janssen spent a considerable amount of money forwork done on the trucks. He then brought a law-suit against Hook for the amount spent, claimingthat the statement by Hook that the trucks werein good condition amounted to a breach of an ex-press warranty. Is Janssen correct? ( Janssen v.Hook, 272 N.E.2d 386)

5. Henningsen purchased a brand-new Plymouthautomobile from Bloomfield Motors and gave itto his wife as a gift. While driving the new car,Henningsen’s wife crashed into a brick wall andwas injured because a defect in the steeringwheel caused her to lose control of the car. Shesued Bloomfield Motors for her injuries underthe breach of the implied warranty of mer-chantability. Bloomfield Motors claimed thatthere was no privity of contract between themand Mrs. Henningsen and that she could not recover. Can Mrs. Henningsen recover fromBloomfield Motors? (Henningsen v. BloomfieldMotors, N.J. 161 A.2d 69)

6. While Lovitz was shooting at clay targets at the McCaun Gun Club, his Remington Model 1100shotgun manufactured by the Remington ArmsCo. exploded in his hands. Lovitz, who suffered

injuries to his left hand and thumb, sued Reming-ton, claiming that a manufacturing defect in theshotgun made the company strictly liable for hisinjuries. Remington contended that prior to ship-ment the gun was field tested, but the test did notreveal any defects. An expert witness stated at trialthat each time the gun was fired, tiny particles ofmanganese sulfide escaped into the steel barrelcausing it to crack and that the cracks continuedto expand, causing the gun to explode. Can Lovitzsue Remington for injuries based on products lia-bility? (Lovitz v. Remington Arms Co. Inc., 532N.E.2d 1091)

7. Husted purchased a used car from Reed Motorsand obtained a loan through the First NationalBank. The car broke down and could no longer beused. Husted refused to pay the balance due onthe car. At the time the car was purchased, thecontract signed by Husted contained a conspicu-ous clause stating that the buyer accepted the carin its present condition. The contract also con-tained other language indicating that the car wassold “as is.” Was Husted responsible for paying thebalance due on the car? (First National Bank ofElgin v.Husted, Ill. 205 N.E.2d 780)

8. Maritime entered into a contract to purchase ahelicopter from Fairchild. Among the relevantprovisions typed into the agreement in normalsize, lowercase print on a regular printed formwas a clause stating that the sale was to be made“as is” and that the seller gave no express or im-plied warranties except the warranty of title.Maritime had problems with the helicopter andsued Fairchild for an implied warranty, claimingthat the helicopter was not merchantable.Fairchild defended, saying that the clause in thecontract, which stated that no warranties weregiven with the sale of the helicopter, acted as adisclaimer of the implied warranty of mer-chantability. Is Fairchild correct? (Fairchild Indus-tries v.Maritime Air Services, Ltd., 333 A.2d 313)


301

The Ridgeway Theater purchased a large air-conditioning system from Blair Manufacturing Co.The system was purchased and installed in May,priorto the start of the summer season.The sales contractcontained a statement that the system would pro-vide sufficient cooling for 1,500 people to a maxi-mum temperature of 72°.The statement further said,“The seller makes no express warranties for thisproduct.” At the beginning of June, it became appar-ent to Ridgeway that the system did not work prop-erly; it provided cool air, but not enough to enablepatrons to be fully comfortable. Ridgeway com-plained to Blair about the air-conditioning systemand withheld payment but continued to use the ma-chine during the summer months because there wasnot enough time to order another system; withoutany air conditioning at all, the theater would havehad to close down. All efforts to repair the systemfailed, and at the end of the summer, Ridgeway de-manded that Blair take the machine back. Blair re-fused to accept the machine and brought suit againstRidgeway for the purchase price.

The TrialRidgeway testified that the temperatures duringthe summer in the area where the theater was lo-cated were extremely warm and that air condition-ing was absolutely essential to enable customers tofeel comfortable during the showing of movies.The theater stated that it relied on the wording inthe sales contract that the system would producesufficient cooling. It further stated that it could notreturn the air-conditioning system immediately af-ter delivery because the theater would have had toclose down and lose its costumers for the entiresummer. The theater also stated that returning alarge system involved a great deal of effort and ex-pense and that it did not want to return the systemuntil it had obtained significant use from it.

The Arguments at TrialBlair’s attorneys argued that the specific wordingin the sales contract disclaiming any express war-ranties prevented Ridgeway from claiming that thesystem was defective. They further argued that thetheater should have returned the system immedi-ately when it discovered that the system was faulty.They also argued that when the theater used thesystem for three months and received many bene-fits from it, it automatically gave up its right to re-scind the contract and return the system.

Ridgeway’s attorneys argued that because ofthe size and weight of the system and the costs in-volved in returning it, Ridgeway had a legal right touse the system for a reasonable amount of time andthen return it. They further argued that the state-ment in the sales contract that the system wouldproduce sufficient cooling outweighed the impor-tance of the statement that there were no expresswarranties.The theater also argued that by keepingthe machine and getting some benefit from it, itwas able to mitigate its damages. Otherwise, thetheater could have held the manufacturer respon-sible for the loss of profits.

Questions to Decide1. Who has the stronger arguments, Ridgeway or

Blair? Why?

2. If you were the judge or jury hearing the case,for whom would you decide on the questionof the warranty? Why?

3. If you were the judge or jury hearing the case,for whom would you decide on the questionof the right to rescind the contract? Why?

4. What do you think the law should be with re-gard to a problem of this nature involvingsomething that is not easily returnable?

Suppose You’re the Judge

THE CASE OF THE FAULTY AIR-CONDITIONING SYSTEM


302

Ethics Emphasis

Rogers went to a local restaurant in her hometown, where she purchased achicken sandwich. As she ate the sandwich, she felt something stuck in her throat.She began to choke and turn blue. The manager immediately called the rescuesquad, and it arrived in a matter of a few minutes. She was taken to the hospital,where the doctor on duty in the emergency room removed a rather large chickenbone from her throat. Rogers remained in the hospital overnight and was releasedthe next day but remained home from work that day because her throat was verysore. She also was emotionally upset, and upon diagnosis, her doctor urged her toremain home for several days. Even though she did return to work after severaldays had elapsed, she had to remain under a doctor’s care until she workedthrough this period of emotional instability. Rogers consulted with an attorneyand, as a result, decided to sue the restaurant for the implied warranty of mer-chantability on the grounds that the chicken sandwich she purchased was not fitfor human consumption. The state where she lived had not yet passed a law deal-ing with food cases like the Rogers case. The state legislators were dealing withtwo possible approaches: that injury from eating food had to meet the foreign-natural test or the reasonable expectations test to be considered a breach of theimplied warranty of merchantability. In this case, the bone was a chicken bone nat-ural to chicken (and not a foreign object) and therefore, should this theory be ap-plied, Rogers would lose her case. With the reasonable expectations test, the jurywould decide who should win based on the facts in the case.

Question to Discuss

If Rogers decided not to take her case to court but to let an arbitrator decide, andyou were that arbitrator, what ethical reasons might you give for deciding the casefor either party?


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